********************************************************
NOTICE
********************************************************
This document was converted from
WordPerfect or Word to ASCII Text format.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
WordPerfect version or Adobe Acrobat version, if available.
*****************************************************************
Before the
Federal Communications Commission
Washington, D.C. 20544
In the Matter of )
)
Ameritech Services, Inc. ) ASD File No: 01-36
SBC Management Services, Inc. )
SBC Services, Inc. )
)
Petition for Waiver of Section 32.27(c) )
of the Commission's Rules )
ORDER
Adopted: October 15, 2001 Released: October 15, 2001
By the Chief, Accounting Safeguards Division, Common Carrier Bureau:
I. INTRODUCTION
1. On July 2, 2001, Ameritech Services, Inc., SBC Management Services, Inc., and
SBC Services, Inc. (administrative affiliates), through their parent Southwestern Bell
Communications, Inc. (SBC) filed a petition for waiver of the affiliate transactions rules, as
codified in section 32.27 of the Commission's rules. Specifically, SBC seeks permission to use
fully distributed cost, in lieu of fair market value, to value services the administrative affiliates
provide to the SBC regulated affiliates, and to a former SBC affiliate. No comments were filed.
In this Order, we grant SBC's request for a waiver of the affiliate transactions rules.
II. BACKGROUND
2. The affiliate transactions rules set forth the procedures that all incumbent local
exchange carriers (ILECs), other than average schedule companies, must use in recording
transactions between regulated and nonregulated affiliates. Section 32.27 of the Commission's
rules requires an ILEC to record transactions for services provided to its affiliated entities at the
greater of fully distributed cost (FDC) or fair market value when, as here, no tariff rate, prevailing
price, or publicly filed agreement exists. This assures that the ratepayer receives the most
reasonably advantageous result from the transaction and protects the ratepayer from subsidizing
the entity's affiliate activities. Section 32.27 further allows that all services provided by an ILEC
from its affiliate(s) that exist solely to provide services to members of the ILEC's corporate
family shall be recorded at fully distributed cost.
3. In its petition, SBC states that its administrative affiliates exist solely to provide
services to members of SBC's corporate family, and thus they provide these services at fully
distributed cost, rather than the higher of fair market value and fully distributed cost. SBC states
that an outside interest has agreed to purchase Ameritech New Media, the cable television
systems owned by Ameritech in October or November 2001. SBC seeks approval for its
administrative affiliates to perform certain services upon the close of the sale, for a term not to
exceed 12 months. The services SBC's administrative affiliates will provide to the purchaser are
accounting services, inventory management, and systems support. SBC estimates the cost of these
services to be $350,000 per month.
III. DISCUSSION
4. The Commission may grant a waiver of its rules for good cause shown. Waiver of
the Commission's rules is appropriate only if special circumstances warrant a deviation from the
general rule and such deviation will serve the public interest. Finally, a waiver request must be
consistent with the principles underlying the rule for which a waiver is requested.
5. Due to the limited duration and scope of these services, we conclude that the burden
of requiring SBC to perform a good faith determination of fair market value for services provided
under these circumstances would outweigh any benefits derived from strict adherence to the rules
in this specific situation. This request arises from a specific situation involving the sale of one
corporate affiliate to an outside third party. We agree with SBC that the public interest will be
served by avoiding the cost to conduct fair market value studies for this relatively minimal
service agreement. Accordingly, we grant the petition for waiver of section 32.27(c) filed by
SBC. This waiver is limited to those corporate services provided under contract between SBC
and the affiliates listed in the waiver request.
IV. ORDERING CLAUSE
6. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 4(j), 201-205, and 218-
220 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 201-205,
and 218-220, and Sections 0.91, 0.291, 1.3, 1.106, 32.18, and 32.27 of the Commission's rules,
47 C.F.R. 0.91, 0.291, 1.3, 1.106, 32.18, and 32.27, that the Petition for Waiver filed by SBC
IS GRANTED to the extent described above in paragraph 5.
FEDERAL COMMUNICATIONS COMMISSION
Kenneth P. Moran
Chief, Accounting Safeguards Division
Common Carrier Bureau